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Oil prices pull back as IEA says demand data sending ‘mixed signals’
By: MarketWatch | April 11, 2019

Natural-gas supplies post weekly rise, but data include an adjustment

Oil futures pulled back Thursday from their highest finish in months as a monthly report from an international agency said data on demand for crude offered “mixed signals” amid sluggishness in global economies.

U.S. benchmark West Texas Intermediate crude for May delivery CLK9, -1.42% on the New York Mercantile Exchange shed 76 cents, or 1.2%, at $63.85 a barrel. It finished a day earlier at $64.61, meaning that prices for a front-month contract saw the strongest finish since Oct. 31, according to Dow Jones Market Data.

On the ICE Futures Europe exchange, June Brent LCOM9, -0.70% lost 50 cents, or 0.7%, to $71.23 a barrel, a day after the front-month contract logged its highest close since Nov. 7.

“Although the main sources of growth are doing well, there are mixed signals from elsewhere,” said the International Energy Agency in a monthly report released Thursday. The Paris-based agency said demand factors remain resilient but cautioned that sluggishness in economic expansion could erode crude appetite.

Demand for crude among countries within the Organization for Economic Cooperation and Development, or OECD, including Australia, Canada and Belgium, fell by 300,000 barrels a day in the fourth quarter of 2018, marking the first quarterly demand decline for the group since 2014.

That IEA report comes a day after a monthly OPEC report showed a significant March output cut by the Organization of the Petroleum Exporting Countries, which the IEA report also affirmed.

Market participants said that, in line with IEA’s comments, a reassessment of economic weakness and its potential impact on crude prices was given commodity investors reason to pause.

Oil’s rally has stalled as “the rise in inventories accompanied new economic projections by the IMF which highlighted slowing growth around the world and numerous risks to the economy. Reports that Russia may be contemplating raising production and refusing to partake in OPEC+ cuts beyond the current June deadline may also have contributed to oil quickly losing its appeal,” said Craig Erlam, senior market analyst at Oanda.

“There remains numerous supportive factors for oil prices though, with clashes in Libya drawing much attention despite current production being uninterrupted. Above $65, the $66-68 has previously been a major area of support and resistance so we may not have to wait long for the rally to once again run into difficulty, if, of course, it finds its mojo again,” he said.

On Wednesday, the Energy Information Administration reported that U.S. crude supplies climbed by a larger-than-expected 7 million barrels for the week ended April 5. That marked a third straight weekly rise. Gasoline stockpiles, however, dropped by 7.7 million barrels that week.

On Nymex Thursday, May gasoline RBK9, -1.68% fell by 1.5% to $2.037 a gallon after settling Wednesday at its highest since early October, while May heating oil HOK9, -0.48% shed 0.4% to $2.080 a gallon.

The EIA said total domestic crude output was unchanged at 12.2 million barrels a day last week, but in a separate monthly report issued Tuesday, the government agency lifted its forecasts for 2019 and 2020 U.S. crude production.

Meanwhile, natural-gas futures traded lower after the U.S. Energy Information Administration reported Thursday that domestic supplies of natural gas rose by 25 billion cubic feet for the week ended April 5.

Analysts polled by S&P Global Platts had expected an increase of 33 billion cubic feet for the latest week. The data, however, also included a downward adjustment to the previous week’s total to account for a “reclassification” of some gas stocks.

May natural gas NGK19, -0.26% traded at $2.689 per million British thermal units, down 1.1 cents, or 0.4%.

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